1. Field of the Invention
Embodiments of this invention relate generally to implementations of supply chain management systems. More particularly, embodiments relate to systems for generating estimates of required supplies of individual products within a family of products.
2. Discussion of Related Art
As supply chains have stretched to span the globe, the complexity of supply chain management systems has increased along with the potential for significant cost savings by more effectively managing the chain. Meanwhile, increasing variety within a given family of products has added additional complexity that can be difficult to properly factor into supply chain management systems and methods.
Current electronic supply chain management methods and systems rely primarily on determinations based on the demand consumers exhibit for a family of products to generate estimates of future needs. It is generally regarded as easier to generate more accurate predictions for the total number of a company's “widgets” consumers will buy than for the individual numbers of each of the many different varieties in which the company may produce their “widgets”. Several forecasting models have been implemented in supply chain management systems in efforts to more accurately forecast demand at the product family level, including: simple exponential smoothing, the Box-Jenkins model, and the Holt-Winters model.
A common approach may be to use a forecast for the product family and a demand mix to create individual product level forecasts. Individual target replenishment quantities are then determined by simply offsetting the demand forecast by the projected inventory. In addition to other failings, this approach ignores the information available in historical inventory data, which like demand can fluctuate over time. Taking into account the supply management difficulties caused by vender-imposed minimums and constraints on production capacity further complicates forecasting efforts.
Therefore, there is a need for better estimation of inventory replenishment and quantity adjustment for individual products within a family of products to account for these difficulties.